SEC Wants Judge To Force Rajaratnam To Hand Over Wiretaps

Dec 21 2010 | 9:04am ET

Having lost his fight to keep thousands of wiretaps out of his criminal trial, Galleon Group founder Raj Rajaratnam will now have to renew his fight to keep them out of the hands of the Securities and Exchange Commission.

The SEC yesterday demanded that Rajaratnam and former co-defendant Danielle Chiesi, both accused of insider-trading, turn over some of the 18,150 wiretaps that they received from prosecutors in the criminal case. And it seems likely that the two will lose at least the first round: The judge presiding over the civil case, U.S. District Judge Jed Rakoff, had ordered them to turn over the taps even before U.S. District Judge Richard Holwell, who is overseeing the criminal case, ruled on their legality.

Rajaratnam and Chiesi received an at least temporary reprieve when a federal appeals court ruled that Rakoff erred by granting the SEC’s request before Holwell ruled. But now that Holwell has ruled that the wiretaps were, in fact, legal, it is unclear that Rajaratnam and Chiesi will still have the appeals court’s ear.

“Given that the legality of the wiretaps has now been established, and given that the SEC is only seeking relevant intercepts, the SEC’s ‘significant’ right to obtain the relevant intercepts outweighs whatever arguable remaining privacy interests defendants and others may have,” the agency said in its filing.

“The SEC’s significant right of access to relevant, legally intercepted communications relating to the defendants’ insider trading scheme, and the substantial prejudice it will suffer if deprived of these intercepts, clearly outweighs any remaining, diminished privacy interests implicated in disclosing the relevant intercepts. Without the recordings, the SEC likely will be deprived of important admissions and in many instances the best, most direct evidence of wrongdoing.”

Rajaratnam and Chiesi may reprise their earlier arguments against giving the SEC the taps, noting that the agency lacks the authority to use wiretaps.


In Depth

Q&A: Reg A+ Will Transform the Alternative Asset Landscape

Jul 7 2015 | 4:03pm ET

In addition to easing capital formation for small companies, Regulation A+ has enormous...

Lifestyle

Fiat Chrysler Files Paperwork For Ferrari IPO

Jul 23 2015 | 5:05pm ET

Italian sportscar maker Ferrari has taken a step closer to a stock market listing...

Guest Contributor

Lifting of Foreign Ownership Limits Signals Sea Change in Vietnam's Capital Markets

Jul 28 2015 | 3:01pm ET

The lifting of restrictions on foreign ownership limits in Vietnam later this year...

 

Editor's Note